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27 Cards in this Set
- Front
- Back
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Economics
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the study of how we make decisions in a world twhere resources are limited.
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Scarcity
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It occurs when we do not have enough resources to produce all of the things we would like to have.
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Example for scarcity
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a rational person compares prices and makes choices based on his or her limited resources.
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Describe the problem of What to Produce
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WE may have to make a choice of using money to go to defense or producing services for those too ill to work.
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Describle the issue of How to Produce
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If we need oil to satisfy our living style, should we allow drilling in an Alaskan wildlife sanctuary?
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Describe the issue of For Whom to Produce
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Who gets the goods? What school benefits?
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List the 3 'to Produce'
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For whom
How What |
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Economic Model
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An economic model is a simplified version of the real world that represents how the economy works, or predict the status of the economy
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Trade-Off
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A Trade-Off is the alternative you face if you decide to do one thing rather than another.
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Opportunity Cost
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is the cost of the next best use of your time when you decide to do one thing rather than another.
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Describe the issue of For Whom to Produce
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Who gets the goods? What school benefits?
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List the 3 'to Produce'
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For whom
How What |
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Economic Model
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An economic model is a simplified version of the real world that represents how the economy works, or predict the status of the economy
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Trade-Off
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A Trade-Off is the alternative you face if you decide to do one thing rather than another.
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Opportunity Cost
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is the cost of the next best use of your time when you decide to do one thing rather than another.
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Fixed Costs
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expenses where the amoount of money used does not depend on how much goods are bought or produced
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Variable Costs
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expenses that change with the amount of items produced or bought
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Total Costs
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Fixed Costs + Variable Costs
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Marginal Costs
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the extra amount of money of producing one extra unit of output
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Marginal Revenue
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the change in total revenue- extra revenue- that results in selling one extra unit
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Marginal Benefit
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the extra benefit associated with an action
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Cost- Benefit Analysis
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an economic model the requires you to compare the marginal cost and marginal benefits of a decision
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Market Economy
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an economic system in which supply, demand, and prices help people make desicions and allocate resources
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Free Enterprise
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businesses are allowed to compete for profit with a minimum of government involvement.
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Capitalism
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where private citizens own most not all of the means or production
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Incentives
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rewards to influence you to take certain economic actions
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Rational Choice
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choosing the alternative that has the greatest value from among comparable products.
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